Program opportunities
Whatever the industry, instituting safety-related programs at the company level and wisely using mandated government programs can minimize accident incidence rates.
For example, fitness-for-duty (see box, #3) and workplace substance abuse programs (see box, #4), such as those involving random drug screenings, may provide reasonable assurance that employees are not under the influence of any controlled substance or impaired in any way that may adversely affect their ability to perform their duties. In most instances, employee assistance programs (for example, counseling, referral, and educational services) are in place to assist with employee rehabilitation.
In the case of Workman's Compensation (WC), employers pay a premium to an insurance company in return for insurance coverage. An individual company's premiums are based on its Experience Modification Rate (EMR) set by the insurance industry for a particular industry classification or sector. The EMR is designed to reflect variation of an employer's actual experience from the expected or average experience for the industry classification. This comparison can result in either a reduction or increase in premiums. Companies with lower-than-average losses are assigned an EMR <1.0, while companies with higher-than-average losses are assigned an EMR >1.0.
The following example dramatizes the impact of EMR on the company's bottom line. Assuming an average workers' compensation rate of $25 for every $100 dollars of payroll, a small 30-employee firm with an EMR of 1.3 (based on worse-than-average losses) and an annual payroll of $600,000 pays $195,000 in annual WC premiums. A similar-sized firm with an EMR of 0.7 (due to fewer-than-average losses) would pay only $105,000 per year, a difference of $90,000. Because understanding the impact of the EMR is key to reducing WC premiums, greater savings in direct WC costs can be realized when a company's EMR is <1.0
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Even so, employers may not recognize the magnitude of the indirect costs. For example, if an employee falls from a defective ladder, WC pays for the direct medical expenses, say $10,000. But the indirect costs to the employer can be more than double that amount—as high as 20 to 1. Indirect costs can consist of production losses, replacing the injured worker, WC premium increases, and possible fines. These increases can have a negative impact on a company's ability to compete for future contracts, because controlling direct and indirect costs of work-related injuries can be the difference between a profitable company and one that is forced to close.
3. Protect your investment. Containment structures are used to prevent the dispersion of airborne chemical and radioactive contamination to employees, the building, and the environment. Courtesy: WESKEM LLC
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